Partner C decided to retire when the partners’ capital balances were: A, capital, ₱600,000; B, capital, ₱600,000; and C, capital, ₱400,000. It was agreed that Partner C is to take the partnership’s fully depreciated equipment with a fair value of ₱24,000 and a note for the balance of his interest. The historical cost of the equipment is ₱36,000. The partners share in profits and losses equally. Which of the following statements is correct? A. A and B would have equal capital balances after the retirement of C. B. A’s capital balance is decreased due to C’s retirement. C. A’s capital balance after the retirement of C exceeds that of B’s. D. B’s capital balance after the retirement of C exceeds that of A’s.
Partner C decided to retire when the partners’ capital balances were: A, capital, ₱600,000; B, capital, ₱600,000; and C, capital, ₱400,000. It was agreed that Partner C is to take the partnership’s fully depreciated equipment with a fair value of ₱24,000 and a note for the balance of his interest. The historical cost of the equipment is ₱36,000. The partners share in profits and losses equally. Which of the following statements is correct? A. A and B would have equal capital balances after the retirement of C. B. A’s capital balance is decreased due to C’s retirement. C. A’s capital balance after the retirement of C exceeds that of B’s. D. B’s capital balance after the retirement of C exceeds that of A’s.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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Question
Partner C decided to retire when the partners’ capital balances were: A, capital, ₱600,000; B, capital, ₱600,000; and C, capital, ₱400,000. It was agreed that Partner C is to take the partnership’s fully depreciated equipment with a fair value of ₱24,000 and a note for the balance of his interest. The historical cost of the equipment is ₱36,000. The partners share in profits and losses equally. Which of the following statements is correct?
A. A and B would have equal capital balances after the retirement of C.
B. A’s capital balance is decreased due to C’s retirement.
C. A’s capital balance after the retirement of C exceeds that of B’s.
D. B’s capital balance after the retirement of C exceeds that of A’s.
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